CITIC Securities: It is expected that in the long term, overseas institutions will continue to increase their holdings of RMB bond assets.

CITIC Securities research report stated that in May and June this year, foreign institutions reduced their holdings of Renminbi bonds for two consecutive months. The main reason was the narrowing of the basis difference between the one-year USD/CNY onshore market, which led to the compression of the comprehensive income of foreign institutions' investment in interbank certificates of deposit, as well as the peak of maturity for interbank certificates of deposit that foreign institutions had invested in during the same period last year. Looking ahead, with the policy direction of "anti-internal circulation" in July, inflation expectations may rise again, causing an impact on the interest rate bond market. After the stock market and the commercial market stabilize, there may be an opportunity for long-term bond allocation. The long-term logic of the internationalization of the Renminbi and the trend of "de-dollarization" are driving foreign investors' long-term demand for diversified asset allocation. It is expected that in the long term, foreign institutions will continue to increase their holdings of Renminbi bond assets. As for the exchange rate, although there has been some fluctuation in foreign capital flow in the bond market, stable expectations for foreign investment in equity markets, steady progress in China-US trade negotiations, and a flexible exchange rate policy by the central bank are expected to maintain the short-term resilience of the Renminbi exchange rate.